Kennett Square’s Genesis HealthCare Inc. reentered the ranks of publicly traded companies when it merged with the Skilled Healthcare Group a year ago, but it has been anything but smooth sailing for the company since then, writes Harold Brubaker for Philly.com.
Shares in Genesis plummeted from $8.77 down to $1.80 on the day of the merger and this week the company posted unenviable results that show a net loss for 2015 of $426 million on increased revenue of $5.6 billion, up from $4.8 billion in 2014. These results show a worrying trend as the net loss increased $172 million from the $254 million net loss reported for the previous year.
In an attempt to alleviate some of the fears emerging from this, Genesis’ Chief Executive, George V. Hager Jr., held a conference call on Tuesday to talk about the results and assure analysts that the company is in a good position for the long play, despite its current short-term issues in the nursing-home industry.
“Our focus on reducing avoidable hospital readmissions, managing down length of stay, and voluntarily participating in value-based programs do in fact challenge our near-term top line, but they are absolutely vital to our long-term success,” emphasized Hager.
During the call, Chris Rigg, an analyst with Susquehanna Financial Group, commented that according to stock market performance, the nursing-home industry was taking hits from what seems to be a widespread move in health care from quantity of services to paying for results.
Hager acknowledged this as a factor, saying that some operators were attempting to remove nursing homes from so-called shared-savings programs or bundled-payment arrangements in order to achieve their financial targets.
As part of these programs, an insurer provides one payment which is supposed to cover all the services required for a specific episode of care. This has led to some orthopedic practices sending patients directly home after a knee replacement to keep within the budget, instead of referring them to a short-term stay in a nursing home for the necessary physical therapy.
According to Hager, Genesis will combat this trend by making sure to adjust its model to better provide short-term services for patients who cannot go home directly following the surgery.
“Ultimately if you can replace a $3,000 acute-care day with a $500 sub-acute day and achieve the same outcomes, you will be successful in a value-based world,” he noted.
